Module 6 Flashcards
What service providers are required for sponsors of DC pension and other Capital Accumulation Plans (CAPs)?
- Larger DC plans: Trustees, custodians, administration service providers, and investment managers.
- Smaller CAPs: Bundled approach via insurers, covering administration, custodial, trustee, and investment services.
- CAP sponsors with fiduciary duties may require advisors for plan governance and investment member guidance.
What are the plan administrator’s duties in relation to the pension fund and the fund holder?
- Ensuring fund assets are held separately and legally compliant.
- Monitoring and supervising fund holder activities.
- Filing copies of agreements and amendments with regulators.
- Remitting contributions and maintaining compliance with the Statement of Investment Policies & Procedures (SIP&P).
What considerations should a plan administrator keep in mind when selecting a pension fund investment manager?
- Alignment with plan sponsor’s investment beliefs and principles.
- Investment manager’s style, objectives, and risk tolerance.
- Manager’s stability, key personnel experience, and pension industry knowledge.
- Fees and cost-effectiveness.
What are the responsibilities of a DC pension plan administrator to members approaching retirement?
- Provide details on available options and actions required.
- Explain default options if no action is taken.
- Inform members about fees, retirement product choices, and unlocking options.
- Ensure timely communication of deadlines and potential impacts on investments.
What are the responsibilities of a DC pension plan administrator to retired members?
- Provide required ongoing communication for variable benefits.
- Ensure compliance with pension legislation for all retirement product offerings.
- Provide fee details for continued investment services where applicable.
When is it necessary to calculate benefits for a Registered Pension Plan (RPP) member?
- Upon termination of employment, retirement, or death.
- In some jurisdictions, benefits are also calculated during marriage/spousal relationship breakdown.
- Required for full or partial plan terminations.
What type of information is generally included in an Annual Information Return (AIR) filing?
- Plan membership details (province, gender, new/terminated members).
- Contribution breakdowns (employee, employer, unfunded liabilities).
- Total fund asset values and compliance reporting.
- Regulatory compliance data as required under pension legislation.
How do operational activities differ between pension and non-pension retirement plans?
- Pension plans require detailed financial reporting and regulatory filings.
- Non-pension plans (e.g., Group RRSPs) have minimal reporting, no audited financial statements.
- Group RRSP custodians handle tax reporting instead of the plan sponsor.
What are pension plan amendment filing requirements?
- Must be filed within regulatory timeframes.
- Plan members must be notified, especially for amendments affecting benefits or contributions.
- Actuarial reports may be required for cost-impact analysis, solvency concerns, or financial compliance.
What CRA filings are required by plan sponsors after a pension plan is registered?
- Plan amendments must be submitted to CRA.
- Pension plan income tax return (T3P) is required for trust-funded plans.
- Pension Adjustments (PAs) and Pension Adjustment Reversals (PARs) must be reported.
- Past Service Pension Adjustments (PSPAs) are required for certain pension credit changes.
What type of information is required in individual annual pension statements? DB VS DC
- DB plans: Credited service, pension accrued, plan financial status.
- DC plans: Account values, contribution history, personal investment returns, applicable fees.
What factors may an employer consider when designing a retirement plan?
- Type of work, union membership, workforce age and service length.
- Goals: attracting/retaining employees, rewarding service, deferring executive compensation.
What plan design considerations impact plan sponsor costs?
- Level of benefits (modest vs. substantial).
- Cost-sharing (contributory vs. non-contributory).
- Indexation for DB pensions.
- Enhanced early retirement options.
What factors may cause an employer to revisit the design of their retirement plan?
- Workforce changes, industry trends, legislative updates.
- Financial considerations, new benefits/products.
- Government program changes, collective bargaining agreements.
What are the steps involved in registering a pension plan?
- Plan sponsor decides to establish a plan.
- Selects service providers.
- Drafts plan text, trust agreements, resolutions.
- Files application with regulatory authorities & CRA.
- Plan is approved by CRA and pension regulator.
What documents must be filed when registering a pension plan?
- Application form, plan document, trust agreement.
- Board resolution, collective agreement (if any).
- Reciprocal transfer agreements (if any), member booklet.
- Initial actuarial report (for DB/target benefit plans).
- Statement of Investment Policies & Procedures (SIP&P).
How do registration requirements differ between pension plans and non-pension plans?
- Pension plans require detailed filings under pension laws.
- DPSPs must register with CRA, submitting trust agreements and resolutions.
- Group RRSPs use pre-approved contract formats with issuers.
- Insurance-based models simplify documentation via bundled services.
What external service providers assist in setting up and maintaining retirement plans?
- Consultants, actuaries, legal counsel.
- Custodians/fund holders, insurance companies.
- Investment managers, advisors, administrators.
- Communication specialists.
What are the roles of consultants, actuaries, and legal counsel in DB plan establishment?
- Assist in plan design, document drafting, and regulatory submissions.
- Review trust agreements, insurance contracts, and employee communication materials.
- Help select service providers.
Who can act as a custodian of a pension plan in Canada?
- A trust company or a board of three or more trustees meeting residency/independence criteria.
- A life insurance company authorized in Canada.
What is the role of a pension plan custodian?
- Holds and safeguards plan assets.
- Follows administrator’s instructions on fund movements.
- Provides financial reporting on pension fund activity.
What are the trust-based and insurance-based models for pension plan administration?
- Trust-based model (common in DB & large DC plans): Unbundled services, independent vendors, greater transparency.
- Insurance-based model (common in smaller DC plans): Bundled services, simplified vendor management, cost efficiency.
What plan member records are maintained for DB plans?
- Dates of birth, hire, retirement.
- SIN, employee ID, contribution history.
- Service credits, beneficiary details.
- Used for valuations, statements, pension calculations.
What are the responsibilities of a DC plan administrator under CAPSA Guideline No. 8?
- Administering the plan & investments as per legislation.
- Providing plan details, investment tools, and ongoing communication.
- Ensuring proper fund management & contribution remittances.
- Monitoring service providers and investment options.
